What is an HMO?

An HMO, or Health Maintenance Organization, is an affordable health insurance plan that is less expensive than standard individual health insurance, but is more restrictive of your choices and focuses more on preventative care.  A HMO has you pick a primary care physician from among its network.  If the primary care physician determines that the patient needs a treatment they can’t provide, they give a referral to a specialist. They usually have very low co-pays for doctor visits and prescription drugs along with low premiums for health insurance.  Co-pay is a small up front charge for doctor visits and buying prescription drugs before the insurance pays the rest. Usually it’s something like $15, but you need to check, as it could be different.  Co-pay should not be confused with coinsurance that is common in other insurance plans including Major Medical or Catastrophic coverage. With Major Medical and several other plans, each doctor visit involves paying a percentage of the treatment, like 80/20 where you pay 20 percent and the insurance company’s 80 percent after you have paid the deductible amount.  A deductible is the amount paid before the insurance starts paying. $500 is a common deductible. With an HMO you just pay the low monthly fee and the small co-pay. Also, most HMOs don’t have a “lifetime maximum” where the policy terminates after a certain amount has been paid out. Also, HMOs do most of the paperwork for you, and don’t require you to submit reimbursement forms.

The downside is that your choices may be restrictive if you want to see a specialist out side of their network. There is no coverage outside of their network for any treatment outside of emergency services. Also, what you consider emergency services and what they do, may be different. The HMO is able to have lower cost premiums because they are able to negotiate with the providers with large numbers of patients and because they focus on preventative care to reduce healthcare costs long-term so you can have affordable health insurance.

 The HMO has its roots in the early part of the 20th century when employers started offering healthcare plans to their employees.  In 1973, the Department of Health and Human Services passed the “HMO Act” which fixed it as a plan in the medical insurance industry.  Some notable HMOs include Blue Cross and Blue Shield and Kaiser Permanente.  See also differences between PPO and HMO.

So if you are worried about wanting to have a specific doctor that may be outside the network, or you want a huge amount of choices for doctors and locations for treatments, a HMO may not be for you.  If you want low cost health insurance with small co-pays instead of deductibles, and can handle having fewer choices for doctors and physicians, a HMO is just what you are looking for. Expert suggest getting three free online quotes/